Wed, February 21, 2024

Dollar Declined Due to Hawkish Messages from Central Banks 

dollar, Weekly Market Overview: Forex, Stocks, Crypto, Commodities

The U.S. dollar fell from a one-month high on Thursday, undermined by a cheerier mood on world markets. Hawkish comments from several central banks in Europe also affected the greenback’s positions. 

Interestingly, Norway became the first developed country to raise rates amid a loosening of pandemic restrictions in many countries.

The greenback shrugged off Wednesday’s announcement by the country’s central bank. The U.S. Federal Reserve announced that it would start tapering off its pandemic-related stimulus in the near future.

On Wednesday, nine out of 18 policymakers projected borrowing costs will need to rise in 2022, including markets. The Fed’s decision did not come as a surprise to markets. But the upwards revision to the central bank’s projected policy path beyond June 2022 in spite of the sub-target inflation projection did. 

Meanwhile, the Bank of England’s statement boosted money market bets on an early-2022 rate hike. The central bank’s post-meeting statement helped to boost the pound. 

Improved risk sentiment helped to offset the Fed’s messages. The country’s central bank’s decision to start tapering bond-buying was overshadowed by Norway’s quarter-point rate increase to 0.25%. The Norwegian krone reached its highest point since mid-June versus the euro to 10.07 krone per euro. It also gained 0.7% against the dollar.

 

Dollar and other currencies 

The dollar index that tracks the greenback against a basket of currencies fell 0.3% to 93.2. The U.S. Dollar suffered the biggest losses against the Canadian dollar as well as Scandinavian currencies.

The Turkish lira fell to a record low after a surprise interest rate cut that came despite inflation hitting 19.25% in August.

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